Bitcoin Halving Impact Fades as Demand Takes Center Stage
According to reports, the Open Interest in Bitcoin is now 30 times higher than it was 11 days before the 2020 Bitcoin halving.
As a particularly bullish year wraps up, there are signs pointing towards a strong 2022 with evidence that more retail investors are entering the crypto scene.
According to data from on-chain analytics firm Glassnode, a whopping 913,000 new Bitcoin addresses were added from November to December in 2021, with the surge coming amidst both the massive rise that saw Bitcoin gaining to see an all-time high as well as the token facing a correction as it dropped back down.
The data shows that a massive wave of new investors has entered the market, despite the dips and corrections, which points towards bullish behaviour for the short and long-term future of the token.
Retail investment increases and Bitcoin wallets with cryptocurrency trending upwards
Looking at the number of Bitcoin wallets that store some cryptocurrency over the year (non-zero addresses referring to a wallet with a balance greater than zero), the outlook for Bitcoin looks strong. OnChainCollege data charted shows how the number of non-zero addresses has steadily increased over the year moving from 30 million addresses in the middle of 2020 to nearly 40 million in December 2021.
🧵I made this chart because I wanted a better way to visualize month over month % change for #Bitcoin Number of Addresses w/ a Non-Zero Balance.
This view is important to me as this helps visualize adoption & the presence of retail investors in the market.
A few observations: pic.twitter.com/IDVzRL5o9r
— On-Chain College (@OnChainCollege) December 29, 2021
According to Glassnode, the increase of non-zero accounts are a strong representation of new investors entering the Bitcoin network with the intention to HODL over a long-term period or start to trade cryptocurrency. A decrease in non-zero accounts is evidence of investors completely selling off their Bitcoin – which would represent a possible bearish long-term trend.
Are we headed towards greater Bitcoin adoption?
While the new entrants are a bullish sign for the longevity of the strength of Bitcoin’s price, there are still other factors to consider that might be the driving force. In November, Bitcoin surged to a new all-time high which caught the attention of new investors looking to diversify, investors who might have been on the fence, and new interested retail investors who are hoping to not miss another opportunity for a future rally. On paper, this is bullish, but it could be a short-term excitement that might see longer-term sell-offs.
Some experts including Will Clemente, Bitcoin analyst, might not be so quick to voice enthusiasm about new retailers entering the market. He notes that the “big boys” are running the show and that retail investment is no longer a factor in Bitcoin trading. With institutions and whales holding such massive amounts of Bitcoin, the supply for retail continuously dips – driving the price up but also making the entry to the market much higher and more difficult.
Retail interest in Bitcoin is pretty much gone since the Spring.
Big boys running the show now. pic.twitter.com/ufs6xxeB1Q
— Will Clemente (@WClementeIII) December 28, 2021
At the same time new retail investors are entering even at this time of year, despite the uncertainty with a new variant with the Omicron outbreak, the festive sell-off, and tax season all threatening Bitcoin price.
The new year will indicate whether retailers will be driving the future of the token or whether we are indeed looking at a show run by the “big boys”.